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Targanta IPO fails to fire up investors

Targanta Therapeutics Corp. chief executive Mark Leuchtenberger, the former CEO of Therion Biologics Corp., hopes to win approval from the FDA to market oritavancin next year. Targanta Therapeutics Corp. chief executive Mark Leuchtenberger, the former CEO of Therion Biologics Corp., hopes to win approval from the FDA to market oritavancin next year. (Wendy Maeda/Globe Staff)

Targanta Therapeutics Corp., the latest local biotech company to go public this year, had an underwhelming debut yesterday.

First, the Cambridge company was forced to price its initial shares at $10, well below the $12 to $14 range expected. Then, during the first day of trading, shares slipped another 60 cents to $9.40, down 6 percent.

Targanta said it is developing antibiotics, including oritavancin, which it acquired from InterMune Inc. of Brisbane, Calif., two years ago. The company said the drug is designed to treat some types of serious bacterial infections, including complicated skin infections.

While InterMune faced some obstacles developing the drug on its own, Targanta said it believes it has overcome potential objections by the Food and Drug Administration and reduced the royalty payments that would have been owed to Eli Lilly and Co., the drug's inventor.

Indeed, Targanta says it expects to win approval from the FDA to market the drug in the United States next year, and then seek regulatory approval in Europe.

Targanta follows other area life sciences firms that have gone public this year, including Molecular Insight Pharmaceuticals Inc. in Cambridge, Insulet Corp. in Bedford, Synta Pharmaceuticals in Lexington, Sirtris Pharmaceuticals Inc. in Cambridge, and Helicos BioSciences Corp. in Cambridge. Adnexus Therapeutics Inc., a Waltham biotech company, had planned to go public as well, but was snapped up by drug giant Bristol-Myers Squibb Co. last month for $430 million, plus up to $75 million in additional conditional payments.

And more companies are looking to go public. Last month, Elixir Pharmaceuticals Inc. in Cambridge, which is developing drugs to treat diabetes and obesity among other things, filed plans for an initial public offering.

But any signs the IPO market is cooling - such as Targanta's disappointing opening trading day - could be bad news for other local biotech firms.

Targanta initially hoped to raise $68 million from the offering, but likely raised $16 million less after it was forced to lower the share price. Company executives declined to comment yesterday, citing federal Securities and Exchange Commission restrictions on what a company can say immediately following an IPO.

Though antibiotics are a potentially lucrative market for a small biotech company like Targanta, they typically are not the blockbusters that excite some drug companies and investors. While patients can take drugs for chronic conditions, like high cholesterol, for years or decades, they usually only take antibiotics for two weeks or less.

As part of Targanta's deal to acquire the rights to oritavancin, InterMune became a major Targanta shareholder. Others include Brookside Capital Partners Fund LP of Boston, and affiliates of Skyline Ventures in Palo Alto, Calif., VenGrowth Private Equity Partners of Toronto, and OriMed Advisors of New York.

As of September, Targanta had 82 employees, but only 10 of them are based at the corporate headquarters in Cambridge. The bulk of its workers are in Montreal and Indianapolis, where the company does its drug discovery and development.

The company is run by Mark Leuchtenberger, a prominent local biotech executive who became Targanta's chief executive in September 2006.

Previously, Leuchtenberger ran Therion Biologics Corp., a privately held company that raised $120 million but closed last year after its most promising drug candidate failed a key test.

Todd Wallack can be reached at twallack@globe.com.

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